Onslow More Than 100% efficient?
At first glance the title of this post seems outrageous. You can't get more energy out of water that you push up hill, by getting it run downhill. That is a Law of Thermodynamics fact.
However, the missing piece of information that makes this possible is that there are two discharge paths from Lake Tekapo. The natural outflow being at the southern end, the Tekapo River (often now dry). The second, now main, discharge point being via control gates into a man made canal that feeds into the Waitaki River, which contains a series of dams operated by Meridian Energy.
https://www.newsroom.co.nz/sustainab...ping-a-4b-coin
Professor Earl Beardsly at the University of Waikato, explains:
"Consider Onslow net energy in the context of the operation of nearby hydro power schemes. The water source for pumping will be either Lake Roxburgh or the Clutha River at some point downstream of the Roxburgh dam. For a Lake Roxburgh connection, there will be some reduction in water lost to Roxburgh spill when Onslow is pumping during times of Clutha high flows. However, the energy gain would not be great."
"Nonetheless, Onslow pumped storage will almost certainly produce a net energy gain. This will come largely from reduced spill in the Waitaki power scheme. That scheme is susceptible to spill losses at times when there are high river flows flooding into already-high levels of Lakes Tekapo and Pukaki. For example, spill from Lake Tekapo down the Tekapo River is also spill with respect to the bypassed power stations Tekapo B, Ohau A, Ohau B, and Ohau C. Onslow operating in the electricity market will have the effect of reducing the frequency of high lake levels, so there will be more storage capacity available -on average- to hold at least a portion of the inflow floods when they happen. The mechanism here is that high lake levels correlate to low electricity market prices, so lake water would be then released to the Waitaki hydro stations to provide the power for Onslow pumping."
SNOOPY
NZs Power Pricing System: Fair or not?
Quote:
Originally Posted by
LaserEyeKiwi
Remarkable comments by Genesis CEO:
“If I was a betting man, I would say that the energy market in its current form] definitely won’t survive this decade in NZ, and it probably won’t survive the next two or three years."
One interesting factor in the NZ power market is the wholesale/retail market and profit split. Vertical market compartmentalization is what allows small independent retailers to 'take on the big boys' and come up with innovative power plans of their own. But how does this market/profit split by the big boy gentailers pan out in practice? For the two gentailers I own shares in it looks like this:
Mercury Energy
|
FY2019 |
FY2020 |
FY2021 |
FY2022 |
Average |
Generation/Wholesale Revenue ($m) |
1,458 |
1,318 |
1,621 |
1,671 |
Generation/Wholesale EBITDAF ($m) |
442 |
485 |
442 |
545 |
Generation/Wholesale EBITDAF Margin |
30.3% |
36.8% |
27.3% |
32.6% |
Retail Revenue ($m) |
817 |
752 |
701 |
783 |
Retail EBITDAF ($m) |
42 |
5 |
21 |
38 |
Retail EBITDAF Margin ($m) |
5.1% |
0.66% |
3.0% |
5.4% |
3.5% |
Contact Energy
|
FY2019 |
FY2020 |
FY2021 |
FY2022 |
Average |
Generation/Wholesale Revenue ($m) |
1,827 |
1,449 |
1,961 |
1,772 |
Generation/Wholesale EBITDAF ($m) |
464 |
426 |
527 |
548 |
Generation/Wholesale EBITDAF Margin |
25.4% |
29.4% |
26.9% |
30.9% |
Retail Revenue ($m) |
548 |
957 |
951 |
1,011 |
Retail EBITDAF ($m) |
67 |
50 |
56 |
17 |
Retail EBITDAF Margin ($m) |
12.2% |
5.2% |
5.9% |
1.7% |
6.3% |
These tables highlight a very large power (sic) imbalance between the 'wholesale' side of the business and the 'retail' side of the business. To some extent this is expected. That is because the capital cost of getting into power generation is much greater than getting into retailing. Investors deserve a fair return on their capital. And I am fairly sure that if I redid that table looking at the 'return on assets' that very large power imbalance between the retail and wholesale sides of the business would shrink.
However, there is also an incentive for the gentailers to keep that retail margin low, because no gentailer wants an explosion of retail competition in the market. If a gentailer can shift more of their profits into the wholesale side of the business that will keep the lid on any potential retail start ups that might have ideas above their own station!
Wholesale power rates are determined by the 'big four' gentailers. Because the spot power price is determined by the highest marginal cost of power offered to fulfill demand, that means there is an industry wide incentive to keep the power supply scarce. The power supplier who makes up that last gap in supply -and so sets the wholesale power price for all market players- may not be creaming it. But all those power suppliers with renewable power stations built at a low (by today's standards) historic cost certainly are. And there is certainly no incentive for any of the four gentailers, who are sitting on large profits from their portfolio of historically developed assets, to 'change the system'.
It is into this environment that Onslow comes into the picture. An Onslow pumped hydro-system would take some of the cream profit from those gentailers operating historic low cost assets in times of short power supply. However, the bill for making the power system 'fairer' for consumers -by building Onslow- is substantial, with a figure of $4 billion being bandied about. The other factor that must not be forgotten is that despite the extensive privatisation of the power sector of the last decade, the biggest shareholder benefiting from the power pricing system that we have today is still the government itself (through their controlling stakes on Meridian, Mercury and Genesis). Thus to some extent, if the government were indeed to proceed with Onslow, it would be a foot-shot into their own financial revenue coffers of the future.
Rounding out the argument for keeping the current system as it is: No government capital has been required to be injected into the power system in the quest of building new power stations since the Clyde dam was commissioned in the 1980s. Although consumers don't like paying big money for power, imagine the howls of protest if the government had to put up taxes (remember the top income tax rate was 66% in the early 1980s) to pay for new power stations to secure the nations power supply.
SNOOPY